Question: Assume that an investor pays 800 for a long term bond
Assume that an investor pays $800 for a long-term bond that carries an 8% coupon. In 3 years, he hopes to sell the issue for $950. If his expectations come true, what yield will this investor realize? (Use annual compounding.) What would the holding period return be if he were able to sell the bond (at $950) after only 9 months?
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